But Mr Mills told 105.7 Breakfast the Government was not backing out of the plan.

"We're uncertain if the design is an adequate design, the location, nonetheless, the commitment stands and we want to make sure we deliver on this," Mr Mills told 105.7 Breakfast.

"There are some questions being asked at the moment but they are being asked for good reasons."

Northern Territory Labor Senator Trish Crossin said the Federal Government stood by its $70m contribution to the $110m project, and that she had received no complaints about the planned location.

"Of course we support the Northern Territory Government in their call to make sure the building is up to scratch," she said, adding that it was not the Federal Government's role to ensure the building was cyclone safe.

"I've certainly had no feedback from people in Palmerston about the location - actually to the contrary; people have said it is smart and sensible there in the medical precinct."

"It's interesting the Chief Minister says it's all going ahead and its certain but the Health Minister says its future is uncertain."

Palmerston Council CEO Ricki Bruhn said the council had some concerns over the planned hospital location.

"We believe (the location) is an issue - it does not provide a lot of scope for future expansion," Mr Bruhn told 105.7 Breakfast.

"If the hospital was to go on that site we believe substantial road upgrades would be needed.

"There may be a site along the Stuart Highway that is a bit more accessible ...but I understand the head works to look at the site is cost prohibitive as well."

Mr Bruhn said the Palmerston council would be "most upset" if the hospital plan was scrapped altogether.

"The Palmerston community has worked so hard over so many years for this hospital. To suggest it might be taken away would be a real kick in the guts."